TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, February 21, 2018

Early, Individualized, Outreach To Low-Performing Law Students Does Not Improve Their Final Grades

David M. Siegel (New England), Should You Bother Reaching Out? Performance Effects of Early Direct Outreach to Low-Performing Students, 94 U. Det. Mercy L. Rev. 427 (2017):

Do early alerts to students at-risk in a law school course affect their performance? Increased use of formative assessments throughout higher education, and now their required use in legal education, permits identification of students whose performance suggests they are at-risk early in a course. In legal education, formative assessments must “measure and improve student learning and provide meaningful feedback to students,” and recent research suggests individualized feedback to law students can improve students’ overall performance. Outside law schools, higher education has increasingly used early alert systems to identify and reach out to at-risk students, but their utility at improving performance is still in question.

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February 21, 2018 in Legal Education | Permalink | Comments (4)

Tuesday, February 20, 2018

Cauble: Exploiting Regulatory Inconsistencies

Emily Cauble (DePaul), Exploiting Regulatory Inconsistencies, 74 Wash. & Lee L. Rev. 1895 (2017):

In many instances, sophisticated parties exploit inconsistencies between regulatory regimes to achieve beneficial treatment under each regime by obtaining classification under one regime that is, at least superficially, inconsistent with classification under the other regime. For instance, parties might design an instrument that is treated as “debt” for tax purposes, but “equity” for purposes of capital requirements instituted by financial regulators.

This Article asks whether exploiting regulatory inconsistencies is problematic. This Article concludes that inconsistency, in and of itself, is not necessarily a problem.

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February 20, 2018 in Scholarship, Tax | Permalink | Comments (0)

The Secret To Midcareer Success: Shift From Primary (Hard) Skills For Personal Productivity To Secondary (Soft) Skills For Leadership

Wall Street Journal op-ed:  The Secret to Midcareer Success, by Michael S. Malone (Santa Clara):

Why are some top professionals able to maintain peak performance throughout long careers, while others who may be even more talented quickly fade and fall behind? And why do some lesser performers suddenly take off in midcareer and accomplish astonishing things?  Two successful tech leaders offer remarkably similar answers to these questions.

Anil Singhal was born in India but emigrated to the U.S. before co-founding NetScout Systems in 1984. ... A key part of Mr. Singhal’s management strategy has involved helping top young employees make the transition to midcareer success. In particular, he believes that employees’ “primary skills” can take them only so far. “Those talents by which you earned your college degrees and first made your professional reputation,” writes Mr. Singhal in his upcoming book, can drive success for the first 10 years of a career. After that, “secondary skills”—social qualities like the ability to interact well with colleagues—become the key to continued success.

Mr. Singhal believes that most employers mistakenly nurture primary skills at the expense of secondary ones. This is especially true for employees who are highly productive right off the bat. Unless they move into management or mentorship roles, these increasingly expensive employees can become a drag on employers as their productivity naturally falls off.

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February 20, 2018 in Legal Education | Permalink | Comments (0)

Why Is It So Hard For Democracies To Deal With Inequality?

New York Times op-ed:  Why Is It So Hard for Democracy to Deal With Inequality?, by Thomas B. Edsall:

In theory, in a democracy, the majority should influence — some would even say determine — the distribution of income. In practice, this is not the case.

Over the past few decades, political scientists have advanced a broad range of arguments to explain why democracy has failed to stem the growth of inequality.

Most recently, Thomas Piketty, a French economist who is the author of “Capital in the Twenty-First Century,” has come up with a straightforward answer: Traditional parties of the left no longer represent the working and lower middle classes.

In a recent Power Point presentation, “Brahmin Left vs Merchant Right,” Piketty documents how the domination of the Democratic Party here (and of socialist parties in France) by voters without college or university degrees came to an end over the period from 1948 to 2017. Both parties are now led by highly educated voters whose interests are markedly different from those in the working class.

The result, Piketty argues, is a political system that pits two top-down coalitions against each other. ...

The Piketty report is a significant contribution to the growing collection of studies analyzing the inability of democratic forces to adequately counter inequality.

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February 20, 2018 in Tax | Permalink | Comments (1)

Tax J.D. And LL.M. Program Rankings By Tax Hiring Authorities

Tax Talent, 2018 Top in Tax Educational Survey:

This annual survey provides tax employers the opportunity to vote for the best U.S. undergraduate, graduate and legal programs from their perspective for the 2017-2018 school year. 370 total respondents (U.S. tax hiring authorities, from both corporate in-house tax departments and professional service firms). This respondent total is up from 321 the previous year.

Recuiter 10 (JD)

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February 20, 2018 in Law School Rankings, Legal Education, Tax | Permalink | Comments (1)

45th Annual Pepperdine Law School Dinner: Our Place In The World

Our Place in the WorldTickets are available for the 45th Annual Pepperdine School of Law Dinner at the Beverly Wilshire Hotel in Beverly Hills.  The theme is Our Place in the World, which is particularly approprriate this year in light of the $8 million gift we received in September to support of our global justice program (the largest single endowment gift in the law school's history).

Our featured speaker is Gary Haugen, CEO of International Justice Mission.  Before founding IJM in 1997, Gary was a human rights lawyer for the U.S. Department of Justice. In addition to his work across the globe on human rights issues, Gary is an author of several books and a visiting professor at Pepperdine.  To pique your interest, check out his 2015 TED Talk:

February 20, 2018 in Legal Education | Permalink | Comments (0)

Avi-Yonah & Vallespinos: U.S. Tax Reform And The WTO

Reuven S. Avi-Yonah (Michigan) & Martin Vallespinos (S.J.D. 2018, Michigan), The Elephant Always Forgets: US Tax Reform and the WTO:

The “Tax Cuts and Jobs Act” (TCJA) enacted on December 22, 2017 includes several provisions that raise WTO compliance issues. At least one such provision, the Foreign-Derived Intangible Income (FDII) rule, is almost certain to draw a challenge in the WTO and is likely to lead to another US loss and resulting sanctions. This outcome would be another addition to the repeated losses suffered by the US for export subsidies from the 1970s to 2004, which led to the imposition of sanctions and the ultimate repeal of the offending regime. The important question for 2018 and beyond is whether the Trump administration and its Congressional allies will react to such a loss in a similar fashion as the Bush administration did in 2004, or whether it will defy the WTO, with potential far-reaching consequences for the world trade order.

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February 20, 2018 in Scholarship, Tax | Permalink | Comments (0)

KPMG Report On New Tax Law

Millennials, Deliberate Learning, Motivation, Resilience, And Law Students

Kim Kass (Valparaiso), Millennials, Deliberate Learning, Motivation and Resilience:

Law school faculty and staff frequently engage in conversations about the challenges of teaching the millennial generation. The millennial generation will continue to fill law school seats for the next several years. Many of these students have had much different educational and life experiences than the law faculty who have been tasked with teaching them.

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February 20, 2018 in Legal Education | Permalink | Comments (1)

Monday, February 19, 2018

Wax: The Closing Of The Academic Mind

Following up on my previous posts (links below):  Wall Street Journal:  The Closing of the Academic Mind, by Amy Wax (Pennsylvania):

There is a lot of abstract talk these days on American college campuses about free speech and the values of free inquiry, with lip service paid to expansive notions of free expression and the marketplace of ideas. What I’ve learned through my recent experience of writing a controversial op-ed is that most of this talk is not worth much. It is only when people are confronted with speech they don’t like that we see whether these abstractions are real to them.

The op-ed, which I co-authored with Larry Alexander of the University of San Diego Law School, appeared in the Philadelphia Inquirer on Aug. 9 under the headline, “Paying the Price for the Breakdown of the Country’s Bourgeois Culture.” It began by listing some of the ills afflicting American society. ...

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February 19, 2018 in Legal Education | Permalink | Comments (6)

WSJ: The New Tax Law Makes Analyzing Corporate Earnings Trickier

WSJWall Street Journal, The Tax Law Is About to Make Analyzing Earnings Trickier:

The new U.S. tax law could throw a monkey wrench into a method many analysts and investors use to gauge the strength of companies’ earnings.

A provision of the tax overhaul enacted in December assesses a one-time tax on companies’ accumulated earnings from outside the U.S. But while the tax is typically charged to companies’ 2017 earnings, firms have the option of stretching the actual tax payment over the next eight years, interest free.

That decision, which companies need to make this year, could throw off the comparison of a company’s earnings to its cash flow, a traditional way of assessing earnings quality.

Investors like to see a company’s earnings fully backed by the cash its operations are generating. It demonstrates the company has the money to pay shareholder dividends and invest in its own future. But stretching out payments of the “transition tax” on foreign earnings will muddy that comparison, accounting experts say.

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February 19, 2018 in Tax | Permalink | Comments (1)

The Uncertain Landscape For Online Legal Education

Inside Higher Ed, The Uncertain Landscape for Online Legal Education:

In late 2013, the American Bar Association gave a private nonprofit law school in Minnesota permission to create a part-time Juris Doctor program that blended online courses heavily with face-to-face instruction. The question Inside Higher Ed posed in our article at the time was “whether it marks an experiment or a turning point for how legal education is delivered in the U.S.”

More than four years later, the answer remains unclear, with a mixed record for law schools seeking approval to create programs with significant online presences and the ABA apparently contemplating a loosening of its standards.

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February 19, 2018 in Legal Education | Permalink | Comments (0)

Galle: Kill Quill, Keep The Dormant Commerce Clause — History's Lessons On Congressional Control Of State Taxation

Brian D. Galle (Georgetown), Kill Quill, Keep the Dormant Commerce Clause: History's Lessons on Congressional Control of State Taxation, 70 Stan. L. Rev. Online ___ (2018):

The world of internet commerce was shaken to its foundations in January this year, when the Supreme Court agreed to reconsider its landmark holding in Quill Corp. v. N. Dakota. For more than twenty-five years, Quill has barred states from imposing tax-collection obligations on retailers lacking “physical presence” in the taxing state. As a practical matter, this has meant that internet retailers with no employees or facilities in a state can sell into the state without collecting the sales taxes that local retailers must. In this Essay, I’ll argue that original historical evidence I’ve collected suggests that the political economy premises on which Quill rests are fundamentally mistaken. But I believe that same evidence should lead the Court to keep in place the larger body of “Dormant Commerce Clause” jurisprudence from which Quill first sprung.

February 19, 2018 in Scholarship, Tax | Permalink | Comments (0)

Lesson From The Tax Court: The Phantom Of The Tax Code—Discharge Of Indebtedness

Tax Court (2017)The Tax Court issued two opinions on January 16, 2018, where taxpayers got hit by what I call the Phantom of the Tax Code: Discharge of Indebtedness (DOI), also known as Cancellation of Debt (COD). I will first tell you about each case, and then discuss what we can learn about this Phantom.

In John Anthony Glennon v. Commissioner, T.C. Memo. 2018-4, Mr. Glennon got unlucky in Las Vegas, but not in the usual way. He was at the airport and was enticed by the offer of a $59 fly-anywhere ticket to sign up for a Southwest Airlines credit card issued by Chase Bank. Like most of us, he just wanted the enticement and after using it planned to cancel the card. But times got bad and he needed the card to pay living expenses. He fell behind in payments and in 2014 the bank contacted him with an offer to settle the debt. He took the offer, and his payment left him with a balance due of just under $9,686. The bank then cancelled that remaining debt and in 2015 sent him a Form 1099-C. Mr. Glennon did not report the COD income and thanks to its nifty computer matching system, the IRS discovered the resulting deficiency in tax. Mr. Glennon’s main argument before the Court seems to be that “the debt had been resolved by his settlement.” The Court responded: “petitioner did not understand the concept of cancellation of indebtedness income.”

In Michelle Keel v. Commissioner, T.C. Memo. 2018-5, Ms. Keel’s 2015 COD income kicked her over the income limit to receive health insurance premium assistance tax credits. Those credits are given to taxpayers on a monthly basis in the form of direct payments to insurers to help pay for the taxpayer’s health insurance. Their purpose is to help with cash flow problems. In Ms. Keel’s case, she claimed the credit for 2015 and the federal government paid $335 per month to her insurer.

Only taxpayers whose income falls below a ceiling can get the health insurance premium assistance credits. And while taxpayers are allowed to estimate their income for the year, they must reconcile the amount of credits received with their actual income. In 2015 the ceiling for Ms. Keel was $46,680. In 2015 Ms. Keel had wage income of $39,000 and if that were her only income, she would qualify. However, in 2015 the Bank of America discharged some $16,000 of indebtedness. If you add that to the wage income, it took her well above the ceiling. While Ms. Keel properly reported the COD income on her return, she failed to reconcile. The IRS did it for her and Ms. Keel protested the resulting NOD. She asserted in her petition that the COD should not count in computing her eligibility for the premium assistance tax credits. But she failed to otherwise appear or argue the matter.  The Tax Court granted Summary Judgement to the IRS.

Each cases teaches us something about the Phantom of the Tax Code: a basic lesson and a more advanced one. Both lessons are below the Fold

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February 19, 2018 in Bryan Camp, New Cases, Tax | Permalink | Comments (2)

Denver Adopts A Kinder, Gentler Post-Tenure Review Policy: Development, Not Punishment

DenverFollowing up on my previous posts on the lawsuit by female law profs against the University of Denver Law School (links below):  Chronicle of Higher Education Special Report, A More Upbeat Approach to Post-Tenure Review:

The University of Denver is instituting a program focused not on punitive measures but on helping professors develop their skills.

Most Professors Hate Post-Tenure Review. A Better Approach Might Look Like This.

Skill development and guidance from colleagues take precedence at the University of Denver.

"Once you’ve got tenure you can antagonize people or bring them in. You can get the most out of them rather than force them to fit a cookie-cutter mold." ...

"Faculty development is not a punishment. The final goal was to make people understand that they couldn’t get tenure and just rest."

The Evolution of a Faculty-Focused Approach

At the University of Denver, faculty members overcame anger and distrust to hammer out a novel set of post-tenure policies.

[T]here were numerous faculty members who were pushing for post-tenure review in what I viewed as a punitive fashion. Some of them were angry at colleagues that they didn’t perceive as being productive and wanted a way to get rid of them. I thought it was fairly draconian, but it started a conversation.

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February 19, 2018 in Legal Education | Permalink | Comments (1)

Tax Reform And IRS Resistance

Wall Street Journal:  Tax Reform and IRS Resistance, by Kimberley A. Strassel:

With all the good news about the new Republican tax law, you may be surprised to learn that the fight isn’t over. Behind the scenes, reformers face a new challenge: Navigating the IRS swamp.

It’s a little-known fact that for 35 years the Internal Revenue Service has exempted itself from the most basic regulatory oversight. When the Labor Department or the Small Business Administration create “major” or “significant” rules or guidance, they are required to submit them for centralized review. That ensures regulations are consistent with the law and with White House priorities and that they’ve been analyzed for costs, benefits and flexibility.

But in 1983, the Treasury Department signed a memorandum with the Office of Management and Budget that largely exempted the IRS from submitting its rules to White House review via OIRA, the Office of Information and Regulatory Affairs. The memo still stands today. In the face of congressional attempts at oversight, the IRS issued a 1996 opinion claiming that tax statutes are in and of themselves responsible for any costs or inflexibility—that the IRS’s rules are, by definition, pure distillation of law. ...

[T]he IRS is already playing games with the GOP tax reform.

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February 19, 2018 in IRS News, Tax, Tax Policy in the Trump Administration | Permalink | Comments (2)

TaxProf Blog Weekend Roundup

Sunday, February 18, 2018

WSJ: Admissions Officers Personally Deliver Acceptances To Applicants (Sometimes With A Dog)

ButlerWall Street Journal, Who’s at the Door? College Officials Delivering Your Acceptance in Person (Sometimes With a Dog):

Admissions officers are traveling hundreds of miles with a live animal to inform high-school seniors they have been accepted to a college—and to urge them to enroll. It’s not just the star athletes or scholarship winners who get the treatment. It is pretty much anyone, a tactic driven by competition to snag the declining number of college-bound high-school students.

One of the hardest working college salesmen is Trip, a 6-year-old English bulldog with doleful, dark eyes. His predecessors are retired.

On road trips, he paces himself with long naps in the back seat of the school’s car while it shuttles him from Butler University in Indiana to prospective students’ homes in Boston, Milwaukee, Orlando and Chicago. Occasionally he hitches an airplane ride if his visits coincide with road games for the school’s nationally ranked basketball team. ...

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February 18, 2018 in Legal Education | Permalink | Comments (4)

Religious Organizations Should Not Lose Their Tax-Exempt Status Based On Public Policy, Post-Obergefell

Sally Wagenmaker (Wagenmaker & Oberly, Chicago), Why Religious Organizations Shouldn't Lose Tax-Exempt Status Based on Public Policy, Post-Obergefell:

Since the U.S. Supreme Court issued its historic same-sex marriage decision in Obergefell v Hodges in June 2016, the question has been raised whether religiously-affiliated organizations could lose their Section 501(c)(3) tax-exempt status or not, based on the “fundamental public policy” doctrine as used in the Court’s 1983 decision in Bob Jones University v. United States. Several significant considerations come into play: the value and place of religious liberty freedoms within our country’s constitutional framework and shifting cultural context; the IRS’s role as arbiter of Section 501(c)(3) recognition; and the “tax subsidy” theory that accompanies tax-exempt status, particularly whether it should affect religious Section 501(c)(3) organizations.

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February 18, 2018 in Legal Education, Scholarship, Tax | Permalink | Comments (0)

Cincinnati Law School Dean's Son Subject Of Racist Taunts At High School Basketball Game

Cincinnati Enquirer:  We're All Better Than This Racist Crap Going on at Our Area High Schools, by Paul Daugherty:

Standing at the free throw line Friday night at Elder High School, St. Xavier senior basketball player Bobby Jefferson was no more than 30 feet from the Elder students who chanted this at him:

“He can’t read.’’

Later, Jefferson would also hear:

“(He) smokes crack.’’

And:

“(He’s) on welfare.’’ ...

For the record, Bobby Jefferson is an African-American, headed to Dartmouth College next fall. ...

What the heck is going on with us? What are we doing?

Have we suddenly lost our minds and misplaced our collective conscience?

I’ve lived here 30 years. Today is the first day I’m embarrassed about that.

First, we had kids in a recreational league wearing jerseys bearing the words “Knee Grow’’ and “Coon’’. Now, we have students at Elder, disgracing themselves, their families and their school. When might it stop, when do the angels of our better natures reappear?

Elder High School is better than this. Its students are better. Their parents who raised them are better, the city in which they live is better. We’re all better than the racist crap we’ve had to put up with from our high school kids the last few weeks. ...

Mina Jefferson, Bobby’s mother [and Associate Dean, Chief of Staff, and Director of the Center for Professional Development at the University of Cincinnati College of Law] was in the stands Friday night. She listened to the slurs for more than a half, until St. X coach Jimmy Lallathin beseeched the referees to do something. That’s when an Elder coach told the students to cool it.

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February 18, 2018 in Legal Education | Permalink | Comments (4)

The Top Five New Tax Papers

SSRN LogoThere is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new paper debuting on the list at #5.

  1. [32,029 Downloads]  The Games They Will Play: An Update on the Conference Committee Tax Bill, by Ari Glogower (Ohio State), David Kamin (NYU), Rebecca Kysar (Brooklyn) & Darien Shanske (UC-Davis) et al.
  2. [1831 Downloads]  Understanding the Tax Cuts and Jobs Act, by Sam Donaldson (Georgia State)
  3. [964 Downloads]  Federal Income Tax Treatment of Charitable Contributions Entitling Donor to a State Tax Credit, by Joseph Bankman (Stanford), David Gamage (Indiana), Jacob Goldin (Stanford) & Daniel Hemel (Chicago) et al.
  4. [645 Downloads]  Is New Code Section 199A Really Going to Turn Us All into Independent Contractors?, by Shu-Yi Oei (Boston College) & Diane M. Ring (Boston College)
  5. [427 Downloads]  The Tax Lifecycle Of A Single Member LLC, by F. Philip Manns Jr. (Liberty) & Timothy M. Todd (Liberty)

February 18, 2018 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, February 17, 2018

This Week's Ten Most Popular TaxProf Blog Posts

Treasury Proposes Repeal Of 298 Tax Regulations

RegsTreasury Proposes Repeal of Nearly 300 Outdated Tax Regulations:

The U.S. Department of the Treasury today proposed repealing 298 tax regulations that are unnecessary, duplicative or obsolete and force taxpayers to navigate needlessly complex or confusing rules. President Trump issued an Executive Order on April 21, 2017, directing Treasury to review tax regulations to ensure a simple, fair, efficient, and pro-growth tax system. Today’s actions are a direct result of that review.

“We continue our work to ensure that our tax regulatory system promotes economic growth,” said Secretary Steven T. Mnuchin. “These 298 regulations serve no useful purpose to taxpayers and we have proposed eliminating them. I look forward to continuing to build on our efforts to make the regulatory system more efficient and effective.”

The regulations proposed to be repealed fall into three categories:

  1. Regulations interpreting provisions of the Code that have been repealed;
  2. Regulations interpreting provisions that have been significantly revised and the existing regulations do not account for these revisions; and
  3. Regulations that are no longer applicable.

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February 17, 2018 in IRS News, Tax | Permalink | Comments (2)

Ave Maria Law School Is Now In Compliance With Accreditation Admissions Standard

Ave Maria Logo (2018)ABA Journal, ABA Removes Remedial Actions Requirements for Ave Maria School of Law:

Finding that Ave Maria School of Law is now in compliance with an accreditation standard addressing admissions, the council of the ABA’s Section of Legal Education and Admissions to the Bar has removed requirements of specific remedial actions.

The council decision was recently posted on the Legal Education Section’s website. Public notice about the law school’s compliance with Standard 501(a) and 501(b) was first given in August 2016, after the council affirmed an accreditation committee finding that the law school was not in compliance with the standard. ...

“The ABA seems to have decided that schools should not be admitting significant numbers of extremely high-risk students, which I have defined as students with an LSAT of 144 or below, with correspondingly low grades,” David Frakt, a Florida lawyer and a frequent critic of the accreditation process, told the ABA Journal. “I assume that when Ave Maria submitted its reliable plan to improve their admissions profile that they promised to bring their bottom 25 percent up to 145. Now that they have done that, there is no need to continue the interim monitoring.” ...

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February 17, 2018 in Legal Education | Permalink | Comments (2)

Leonard Silverstein, Founder Of The BNA Tax Management Portfolio Series, Dies At 96

SliversteinWashington Post, Leonard Silverstein, Washington Tax Lawyer and Arts Patron, Dies at 96:

Leonard L. Silverstein, a Washington lawyer and arts patron who started a series of prominent tax-law guidebooks and became a member of the city’s cultural and fundraising firmament, died Feb. 14 at his home in Bethesda, Md. He was 96. ...

As a young, Harvard-educated legal adviser to the Treasury Department, Mr. Silverstein helped shape the Internal Revenue Code of 1954, a massive overhaul of the federal income tax system. In 1959, he created Tax Management Porfolios, authoritative texts for the nation’s accounting firms and which today are part of the Bloomberg media empire.

The next year, he co-founded Silverstein and Mullens, a firm specializing in tax law and estate planning. In 2000, it became a division of what is now the Pittsburgh-based Buchanan Ingersoll & Rooney. Until his death, Mr. Silverstein worked at the merged operation. Among his clients were Fortune 500 companies in fields as disparate as aerospace and entertainment. ...

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February 17, 2018 in Obituaries, Tax | Permalink | Comments (1)

Friday, February 16, 2018

Lawsky Presents A Logic For Statutes Today At Richmond

Lawsky (2017)Sarah Lawsky (Northwestern) presents A Logic for Statutes, 21 Fla. Tax Rev. ___ (2018), at Richmond today as part of its Faculty Colloquy Series:

Case-based reasoning is, without question, a puzzle. When students are taught to “think like lawyers” in their first year of law school, they are taught case-based common-law reasoning. Books on legal reasoning are devoted almost entirely to the topic. How do courts reason from one case to the next? Is case-based reasoning reasoning from analogy? How should case-based reasoning be modeled? How can it be justified?

In contrast, rule-based legal reasoning (as exemplified in much statutory reasoning) is taken as simple in legal scholarship. Statutory interpretation — how to determine the meaning of words in a statute, the relevance of the lawmakers’ intent, and so forth — is much discussed, but there is little treatment of the structure of statutory reasoning once the meaning of the words is established. Once the meaning of terms is established, statutory reasoning is considered, roughly speaking, to be deductive reasoning.

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February 16, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Weekly SSRN Tax Article Review And Roundup: Scharff Reviews Shaviro's A Requiem For The Destination-Based Cash Flow Tax

This week, Erin Scharff (Arizona State) reviews a new working paper by Daniel Shaviro (NYU), Goodbye To All That:  A Requiem for the Destination-Based Cash Flow Tax.  

Scharff (2017)In teaching tax policy, I tend to focus on the core tax policy ideas of efficiency, fairness, and administrability, and I explicitly side step questions of government spending.  In thinking about the 2017 tax legislation, and, especially after reading Shaviro’s latest working paper, I question whether such debates can be so neatly self-contained.  The story Shaviro tells of the demise of the Destination-Based Cash Flow Tax (DBCFT) proposal is, in part, a story about what happens when tax policy gets debated in that vacuum.  Policy debates overly-focused on the right choice of tax instrument inherently obscure the debate about revenue sufficiency and the potential need for multiple tax instruments. 

I was privileged to hear Shaviro present an earlier draft of this paper at this fall’s National Tax Association conference, before we all were quite certain where the 2017 tax legislation was heading (or whether it would head anywhere at all.)  In the paper (as in the presentation), Shaviro is quite critical of the DBCFT proposal.  For Shaviro, the chief advantage of the DBCFT was the packaging of the idea as corporate tax reform, and its failure to be adopted in 2017 suggests “wholly discarding the DBCFT as a discussion vehicle for its underlying policy ideas.” 

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February 16, 2018 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

Villanova Hosts Colloquium Today On Tax And The Sharing Economy

Villanova Logo (2015)Villanova hosts a colloquium today on Tax and the Sharing Economy:

As described by the World Economic Forum, a “sharing economy” focuses on the sharing of underutilized assets, monetized or not, in ways that improve efficiency, sustainability and community. Well-known examples include Airbnb, Uber and Lyft.

The gathering of renowned scholars is designed to foster free-flowing discussion and to encourage fresh perspectives on challenging issues. Colloquium participants, led by Villanova Law professors Les Book and Joy Sabino Mullane, include:

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February 16, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Ciraolo Presents The Impact of Global Tax Enforcement Today At San Francisco

CiraolaCaroline D. Ciraolo (Kostelanetz & Fink, Washington, D.C.; former Acting Assistant Attorney, U.S. Department of Justice Tax Division) presents The Impact of Global Tax Enforcement at San Francisco today as part of the E. L. Wiegand Visiting Fellow Lecture Series:

Countries around the world are calculating their respective tax gaps and increasing their investment in civil tax enforcement as information regarding offshore tax evasion takes center stage with the surge of whistleblowers and data leaks. At the same time, law enforcement officials are reviewing information obtained from various sources to identify individuals and entities engaged in tax evasion and to pursue criminal investigations. With this looming threat of discovery, taxpayers are considering voluntary disclosure programs to avoid the increasingly severe consequences of non-compliance.

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February 16, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tenure Report Haiku

This is the time of year when tenure decisions get finalized at most institutions. Usually, law faculty vote their recommendations in the Fall semester and then the tenure packages work their way through the various levels of review. Final approval by the relevant governing body happens sooner or later during the Spring Semester, depending on how bulbously bureaucratic the institution is. It will likely happen here at Texas Tech later rather than sooner.

Here at Tech Law the law faculty recommended promotion and tenure for seven professors last fall, a record number. I was chair of the tenure committee for one of them, my colleague Robert Sherwin.

Rob’s a pretty amazing guy. In addition to serving as the Director of Tech Law’s Advocacy Programs, Rob personally coaches anywhere between six to ten advocacy teams a year. And he teaches doctrinal courses. And he is creating a serious body of scholarship on litigation subjects.

It’s the scholarship part that I want to focus on for just a paragraph. I am not sure that his scholarship would be fully appreciated at some institutions because it is heavily doctrinal. You can see for yourself at his SSRN page. But here at Tech Law we take a big-tent approach to scholarship and doctrinal is all right by us. Rob writes to help courts or legislatures solve problems in the law. That is a worthy enterprise. And one of Rob’s articles, a careful exploration of problematic language in anti-SLAPP legislation, led the National Conference of Commissioners on Uniform State Laws to select him as Reporter of the Drafting Committee on the Anti-SLAPP Legislation Act. Few of us academics get this kind of opportunity to have such a direct effect on law. The Tech Law faculty are quite proud of Rob for this.  Other faculties may not share that appreciation. They have a much narrower vision of what it means to be a legal scholar.  

So Rob’s tenure decision was never really in doubt. In fact, in writing Rob’s Tenure Report, each of the three members of his tenure committee vied with each other to see who could use the most superlative superlative to describe Rob’s teaching, scholarship, and service. This was the winner: “if contemporary moot court had a Nick Saban (the University of Alabama’s wildly successful football coach), it would be Rob Sherwin.”

When it came time for the faculty meeting, I was given the last slot to present Rob’s tenure report. That’s kinda like going 30th in the Giant Slalom. After the other six candidates were presented to the faculty, I decided enough was enough. So in lieu of the usual, I offered to summarize our report to the faculty in one of three forms: a haiku, a doggerel, or a limerick. Being the sophisticated faculty they are, my colleagues asked for the haiku.

It’s below the fold. 

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February 16, 2018 in Bryan Camp, Legal Education, Scholarship | Permalink | Comments (0)

IRS To Block Hedge Fund Tax Dodge In New Law

Bloomberg, New Hedge-Fund Tax Dodge Triggers Wild Rush Back Into Delaware:

Wall Street’s fast-money crowd is returning to well-trodden ground to elude Trump-era tax laws: Delaware.

Since late 2017, hedge fund managers have created numerous shell companies in the First State, corporate America’s favorite tax jurisdiction. These limited liability companies share a common goal: dodging new tax rules for carried-interest profits through a bit of deft legal paperwork.

Wall Street Journal, U.S. to Block Tax-Law Loophole on ‘Carried Interest’:

Treasury Secretary Steven Mnuchin said the government will act within two weeks to block a hedge-fund maneuver around part of the new tax law.

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February 16, 2018 in Tax | Permalink | Comments (0)

Thursday, February 15, 2018

Zucman Presents Tax Evasion And Inequality Today At UCLA

Zucman (2018)Gabriel Zucman (UC-Berkeley) presents Tax Evasion and Inequality (with Annette Alstadsæter (Norwegian University of Life Sciences) & Niels Johannesen (University of Copenhagen)) at UCLA today as part of its Tax Policy and Public Finance Colloquium Series hosted by Jason Oh and Kirk Stark:

This paper estimates the size and distribution of tax evasion. We combine random audits, tax amnesties, and leaks from offshore financial institutions matched to wealth records in Scandinavia. Tax evasion rises sharply with wealth: 3% of personal taxes are evaded on average, versus 25%–30% in the top 0.01% of the wealth distribution. A model of the supply of evasion services can explain this gradient. Taking tax evasion into account increases inequality substantially. After using tax amnesties, evaders do not seem to increase legal tax avoidance, suggesting that fighting evasion can allow governments to collect more taxes from the wealthy.

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February 15, 2018 | Permalink | Comments (0)

Polsky Presents Choice-of-Entity Decisions By Silicon Valley Start-Ups Today At Villanova

Polsky (2018)Gregg Polsky (Georgia) presents Explaining Choice-of-Entity Decisions by Silicon Valley Start-Ups at Villanova today as part of its John F. Scarpa Center on Law and Entrepreneurship speaker series:

Perhaps the most fundamental role of a business tax advisor is to recommend the optimal entity choice for nascent business enterprises. Nevertheless, even in 2018, the choice-of-entity analysis remains highly muddled. Most tax practitioners across the United States consistently recommend flow-through entities, such as LLCs and S corporations, to their clients. In contrast, a discrete group of highly sophisticated tax professionals, those who advise start-ups in Silicon Valley and other hotbeds of start-up activity, prefer C corporations.

Prior commentary has described and tried to explain this paradox without finding an adequate explanation. These commentators have noted a host of superficially plausible explanations, all of which they ultimately conclude are not wholly persuasive. The puzzle therefore remains.

This article attempts to finally solve the puzzle by examining two factors that have been either vastly underappreciated or completely ignored in the existing literature.

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February 15, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Glogower Presents Taxing Inequality Today At Indiana

Glogower (2016)Ari Glogower (Ohio State) presents Taxing Inequality at Indiana today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

Economic inequality in the United States is now approaching historic levels last seen in the years leading up to the Great Depression. Scholars have long argued that the federal income tax alone cannot curtail rising inequality and that we should look beyond the income tax to a wealth tax. Taxing wealth also faces two central and resilient objections in the literature: A wealth tax penalizes savings and overlaps with a tax on capital income.

This Article moves beyond this stalemate to redefine the role of wealth in a progressive tax system. The argument proceeds in three main parts. The Article first interrogates the justifications in the literature for a wealth tax and introduces a new justification grounded in the relative economic power theory which explains how inequality generates social and political harm. This theory formalizes the problem of inequality and has specific implications for the way that economic inequality should be measured and constrained. In particular, this theory implies that economic inequality should be measured by differences in economic spending power during the taxing period.

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February 15, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Sanchirico Presents Optimal Redistributional Instruments In Tax Policy And Law & Economics Today At Duke

SanchiricoChris William Sanchirico (Pennsylvania) presents Optimal Redistributional Instruments in Tax Policy and Law & Economics at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

The literature on optimal redistributional instruments begins with the assumption that society has some preference for equality, leaving the precise degree unspecified. It then asks: How should society pursue that preference? More specifically, what kinds of policy instruments — whether categorized as “taxes,” “transfers,” “public goods,” “government programs,” “regulations,” or “legal rules” — should be informed by society’s distributional objectives? This paper reviews and assesses three strands of the literature on optimal redistributional instruments.

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February 15, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Political Discrimination In The Law Review Selection Process

Adam S. Chilton (Chicago ), Jonathan S. Masur (Chicago) & Kyle Rozema (Chicago), Political Discrimination in the Law Review Selection Process:

The career trajectories of law professors and the dissemination of knowledge depend on the publication decisions of law review editors. However, these publication decisions are shrouded in mystery, and little is known about the factors that affect them. In this article, we investigate one potentially important factor: political ideology. To do so, we match data on the political ideology of student editors from 15 top law reviews over a twenty-year period to data on the political ideology of the authors of accepted articles. We find that editors accept articles in part because of shared political ideology with authors. That is, conservative editors are more likely to accept articles written by conservative authors, and liberal editors are more likely to accept articles written by liberal authors.

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February 15, 2018 in Legal Education | Permalink | Comments (0)

Reagan’s ‘Party Of Ideas’ Is Down To Just One: Tax Cuts

New York Times op-ed:  Reagan’s ‘Party of Ideas’ Is Down to Just One: Tax Cuts, by Mike Lofgren (author, The Deep State: The Fall of the Constitution and the Rise of a Shadow Government (2017)):

It is a sign of our slide toward banana republic status when the president of the United States, leader of the world’s foremost democracy, publicly brands Democrats who failed to applaud his State of the Union address as un-American and treasonous. The largely partisan audience was fine with it.

What has become of the Republican Party, which I once served on Capitol Hill and which I now consider a dangerous extremist movement on a par with the ruling Fidesz party in neo-fascist Hungary? Where did its principles go? What became of Ronald Reagan’s “party of ideas”?

One by one, those ideas were tossed aside for expediency and power — except the tax cut. A time traveler from the Reagan era would no longer recognize the Republican Party, but most Republican politicians feel no embarrassment supporting policies they once condemned. ...

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February 15, 2018 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (3)

Bill Henderson Launches The Institute For The Future Of Law Practice

Bill Henderson (Indiana), The Institute for the Future of Law Practice:

I am pleased to introduce readers to the Institute for the Future of Law Practice (IFLP), a new nonprofit collaboration between law schools, law firms, corporate legal departments. ...

IFLP (“i-flip”) will be hosting training bootcamps in May 2018 in Chicago (at Northwestern Law) and Boulder (at Colorado Law). The bootcamps are designed to prep law students for sophisticated legal and business work settings. Each student admitted to the program is paired with a legal employer for either a 10-week summer internship or a 7-month field placement. All internships and field placements are paid. The IFLP program currently includes four law schools — NorthwesternColoradoIndiana, and Osgoode Hall (Toronto) — though the plan is to build an infrastructure that will support and serve a significantly larger number of law students, law schools, and legal employers. ...

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February 15, 2018 in Legal Education | Permalink | Comments (0)

Americans Who Owe > $50k In Back Taxes Will Lose Their Passports

Wednesday, February 14, 2018

Wells: Reform Of Corporate Distributions In Subchapter C

Bret Wells (Houston), Reform of Corporate Distributions in Subchapter C, 37 Va. Tax Rev. 365 (2018):

Subchapter C’s corporation distribution provisions contain significant complexity aimed at obsolete bail-out concerns that needlessly create schizophrenic outcomes in today’s context. Subchapter C’s corporation distribution provisions were designed in an era when dividends were taxed at a different rate than were long-term capital gains, but now in this era it is important to note that Section 1(h)(11) provides that dividends received by individuals generally are taxed at the same rate as long-term capital gains, and the American Taxpayer Relief Act of 2012 made this tax rate parity permanent. Thus, unlike most of the US income tax history, individuals now are entitled to receive the same preferential tax rate for qualified dividends as long-term capital gains. When one examines subchapter C’s provisions that deal with corporate distributions in light of this relatively new reality, the statutory picture reveals significant complexity aimed at obsolete bail-out concerns that now only serve to create schizophrenic outcomes in today’s context.

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February 14, 2018 in Scholarship, Tax | Permalink | Comments (0)

California Law Firm Revenues, Lawyer Salaries Are Booming

California LawyerThe Recorder, California Firms Lead in Revenue, Demand Growth in 2017, Citi Says:

Law firm revenue was up in both Northern and Southern California in 2017, outpacing most other regions surveyed in a recent report from Citi Private Bank’s Law Firm Group.

The gross revenue for Northern California firms increased by 7.2 percent in 2017, which was the highest among the 11 geographic regions analyzed, said John Wilmouth, senior client adviser in Citi’s law firm group. Southern California firms saw gross revenue growth of 5.9 percent, good enough for fourth-best in the country when compared to other regions.

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February 14, 2018 in Legal Education | Permalink | Comments (0)

WSJ: The New Tax Law

ABA Approves Online JDs At Syracuse, Southwestern

Syracuse SouthwesternFollowing up on yesterday's post, ABA Proposes To Double (To 30) The Number Of Credits Law Students Can Earn Online, Including 10 For 1Ls

National Law Journal, ABA Set to Loosen Restrictions on Online Law Classes:

The [ABA Council of the Section of Legal Education and Admissions to the Bar] granted a variance this month to Syracuse University College of Law, which announced plans in 2016 to launch an online J.D. program. The ABA denied the school’s initial request for a variance, but the new approval means Syracuse can move forward with a planned launch in January 2019.

The program will combine live online lectures with self-paced online classes, several weeklong campus sessions and a legal externship, said Nina Kohn, associate dean for research at Syracuse. Students can complete their law degree over the course of 10 semesters.

Southwestern Law School Blog, ABA Grants Southwestern a Rare and Coveted Blended Education Variance:

Southwestern Law School announced today that the American Bar Association (ABA) granted the school a variance to add an ABA-accredited hybrid-online J.D. program to its curriculum.

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February 14, 2018 in Legal Education | Permalink | Comments (0)

Florida Offers 7-8 Graduate Tax Program 85% Tuition Scholarships To Serve As Student Editors Of The Florida Tax Review

UFFTRFollowing up on last week's post, Northwestern Offers 6-8 Graduate Tax Program Tuition Scholarships To Serve As Student Editors Of The Tax Lawyer:  Press Release, UF Law Tax Students Can Receive Up To 85% Tuition Discount as Editors of Florida Tax Review:

Students in the University of Florida Graduate Tax Program have the opportunity to receive up to an 85% tuition discount through a combination of tuition waivers and scholarship funds by becoming an editor of the Florida Tax Review.

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February 14, 2018 in Legal Education, Tax | Permalink | Comments (0)

Simkovic: Taxing Limited Liability

Michael Simkovic (USC), Limited Liability and the Known Unknown:

Limited liability is a double-edged sword. On the one hand, limited liability may help overcome investors’ risk aversion and facilitate capital formation and economic growth. On the other hand, limited liability is widely believed to contribute to excessive risk taking and externalization of losses to the public. The externalization problem can be mitigated imperfectly through existing mechanisms such as regulation, mandatory insurance, and minimum capital requirements. These mechanisms could be more effective if information asymmetries between industry and policymakers could be reduced. Private businesses will typically have better information about industry-specific risks than policymakers.

A charge for limited liability entities—resembling a corporate income tax but calibrated to risk levels—could have two salutary effects. First, a well-calibrated limited liability tax could help compensate the public fisc for risks and reduce externalization. Second, a limited liability tax could force private industry actors to reveal information to policymakers and regulators, thereby dynamically improving the public response to externalization risk.

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February 14, 2018 in Scholarship, Tax | Permalink | Comments (6)

8th Circuit Rejects Unsuccessful Iowa Legal Writing Faculty Candidate's Claim Of Discrimination Due To Her Conservative Views

WagnerFollowing up on my previous posts (links below):  Teresa MANNING, formerly known as Teresa R. Wagner, Plaintiff-Appellant v. Carolyn JONES, Dean, Iowa College of Law (in her official and individual capacities), Defendant-Appellee. Gail B. Agrawal, Dean, Iowa College of Law (in her official and individual capacities), Defendant, 875 F.3d 408 (8th Cir. 2017):

Teresa Manning repeatedly applied without success to teach legal analysis and writing at the University of Iowa College of Law. She contends that, during the process attending her first application, an associate dean advised her not to tell the faculty, only one of whom was a registered Republican, that a conservative law school had once offered her a full-time teaching position. Manning's résumé, meanwhile, made plain her affiliation with conservative groups. Claiming that the dean of the College of Law had rejected her applications due to political discrimination in violation of the First Amendment, Manning sued the dean under 42 U.S.C. § 1983.

This is our third pass at this case. See Wagner v. Jones, 664 F.3d 259 (8th Cir. 2011) (Wagner I); Wagner v. Jones, 758 F.3d 1030 (8th Cir. 2014) (Wagner II). After the second remand, Manning proceeded to trial before a jury, where the dean defended herself by asserting, among other things, that Manning's applications had been rejected on their merits. The jury found that Manning did not establish that the dean had discriminated against her on the basis of her politics, and the district court denied her motion for a new trial. On appeal, Manning contests only the denial of her new-trial motion, and we affirm.

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February 14, 2018 in Legal Education | Permalink | Comments (0)

WSJ: New Tax Law Haunts Companies That Did Inversion Deals

Wall Street Journal, New Tax Law Haunts Companies That Did ‘Inversion’ Deals:

The new U.S. tax law has something in store for some “inverted” companies, which signed mergers overseas that lowered their U.S. taxes: higher taxes.

Companies that engineered so-called inversion deals in recent years have been able to reduce their tax rates and take certain deductions by shifting their tax homes to other nations. Now, provisions in the new tax code restrict some of those deductions, like the interest payments American subsidiaries pay on loans from overseas parents, according to tax experts and companies. ...

Overall, the new restrictions are estimated to raise tens of billions of dollars in tax revenue, though not all of it will come from inverted companies. Tax experts and companies say the law will reduce the advantages of the corporate relocations, but probably not enough to bring companies back to the U.S.

Top 10

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February 14, 2018 in Tax | Permalink | Comments (0)

Tuesday, February 13, 2018

Williamson Presents Why Americans Are Proud To Pay Taxes Today at NYU

Read My LipsVanessa S. Williamson (Brookings Institution) presents Read My Lips: Why Americans Are Proud to Pay Taxes (Princeton University Press 2017) at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

Conventional wisdom holds that Americans hate taxes. But the conventional wisdom is wrong. Bringing together national survey data with in-depth interviews, Read My Lips presents a surprising picture of tax attitudes in the United States. Vanessa Williamson demonstrates that Americans view taxpaying as a civic responsibility and a moral obligation. But they worry that others are shirking their duties, in part because the experience of taxpaying misleads Americans about who pays taxes and how much. Perceived "loopholes" convince many income tax filers that a flat tax might actually raise taxes on the rich, and the relative invisibility of the sales and payroll taxes encourages many to underestimate the sizable tax contributions made by poor and working people.

Americans see being a taxpayer as a role worthy of pride and respect, a sign that one is a contributing member of the community and the nation. For this reason, the belief that many Americans are not paying their share is deeply corrosive to the social fabric. The widespread misperception that immigrants, the poor, and working-class families pay little or no taxes substantially reduces public support for progressive spending programs and undercuts the political standing of low-income people. At the same time, the belief that the wealthy pay less than their share diminishes confidence that the political process represents most people.

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February 13, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)